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Michael Jacksons : What Is GAP Coverage? How can I obtain this insurance?

GAP contracts pay the difference between what a primary insurer pays in the event of a total vehicle loss, including theft, and the outstanding loan balance on the vehicle. (Approximately 2.5 million vehicles are totaled annually.) It is a form of credit insurance similar to credit life, credit disability, and credit property insurance. To illustrate, GAP operates in the following manner.

 Loan balance $28,500

Actual cash value paid by primary insurer $24,500

Difference ($28,500–$24,500) $ 4,000

Deductible $ 500

Total out of pocket expense of owner $ 4,500

GAP pays $4,000 + $500 $ 4,500

 New, used, and leased vehicles and motorcycles are eligible for GAP. GAP pays for losses up to a certain amount ($100,000 for example) and, unlike the example above, it may not include the deductible. Further, the term of coverage may be coextensive with the term of a loan or it may be of shorter duration.

You can obtain Gap insurance through your dealer or directly with the insurance company. Compare auto insurance quotes on line for Gap insurance and you will find good deals with low insurance quotes. Check it out for yourself.

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